DEFI lending platforms employ the open source protocols, to create a platform for trading. As lending and borrowing is the major usage of a Defi lending Platform, every crypto company has extended services to Defi related lending and borrowing development services, i.e, Defi crypto lending. These companies follow Defi protocols, while extending their services. Defi lending platforms provide inbuilt benefits to lenders and borrowers which makes these platforms more attractive in the crypto market.
Cryptocurrency buying and selling is a billion-dollar industry that is growing at a rapid rate. By leveraging price volatility, traders are earning handsome profits. There is a demand for new trading platforms as customers prefer lower fees, faster transactions, multiple currencies and better rewards. Crypto assets are exchanged using the liquidity pools with the help of the smart contracts deployed on the blockchain network. The exchange rate is set by the creator of the market and will change according to the level of trading activity on the platform. Trading activity is intensified due to the availability of profitable opportunities. The best price will be given for the user when they want to exchange a token after checking across all the available reserves. With the rapid increase in business activities, the need for credit has risen many times. In DeFi lending, users can borrow assets from each other by pledging another asset as collateral. Once the borrowing period has been completed, the principal amount along with the specified interest has to be paid by the borrower to the creditor without fail. The collateral will be used to cover up the lender’s loss.
DEFI Lending and Borrowing System
Decentralized system has been called the Defi system. It provides a transparent, permissionless, and open-source financial ecosystem. DeFi Lending is the process of offering and borrowing cryptocurrency assets as a loan on a permissionless decentralized medium. It has a decentralized smart contract that would automate all the crypto lending transactions without the involvement of a middleman. The platforms that offer these kinds of lending services are known as DeFi P2P Lending platforms and there are more popular decentralized applications(Dapps) available in the crypto market that provide DeFi P2P lending options.
There are factors which play an important role in the success of a Defi project. These factors are concept, financial model, and implementation of the process that is being inculcated in a project. The amount of ability one puts in the project. From Token designing to economic aspects, everything plays an important role. Auditing of the code is the most important thing in any crypto project. Especially for a Defi project, a third party, with well-known expertise and knowledge should do the audit for fair play.
DEFI Lending and Borrowing Process
DEFI Lending Process
- Users have to deposit their assets and they earn interest when someone borrows those digital assets.
- However, the intermediary is replaced by a smart contract in DeFi lending, it dictates the loan terms.
- When a smart contract has been deployed on a blockchain network which is self-executing and its operations cannot be stopped unless both parties agree to the terms.
- As DeFi relies on blockchain which is transparent and immutable, the lenders earn high returns, where risks can be accessed clearly.
- The interoperability and standardization of this DeFi lending platform can minimize the cost of the overall system.
DEFI Borrowing Process
- A borrower can obtain fiat loans from lenders with their crypto assets which acts as collateral if the borrower fails to repay the loan.
- The exchange of crypto loans occurs when both the lender and borrower accept the rate of interest.
- As like Traditional loans , here the crypto loans are transferred to the borrower’s account and borrowers pay interest to the lender and when the complete amount is paid back, the lender releases the collateral which acts as the security.
- This borrowing process occurs in DeFi lending platforms without the involvement of third parties.
List of the things DEFI Protocol offers:
- Complete Control over your funds
- No censorship for your assets and transactions
- High level of Liquidity – Add or remove liquidity to the pool
- Trustless way of exchanging ERC 20 tokens
- Make you earn ETH through Yield Farming and Staking
- Cent percentage Decentralized
- Low cost for DEX Trading
- Allows users to contribute liquidity to Uniswap Liquidity Pools
- Allows for direct token exchange
Defi Lending And Borrowing Over Traditional Lending And Borrowing
- High-end Transparency
- Quick access
- Censorship resistance
- Price efficiency and immutability
Advantages Of Defi Lending And Borrowing
- Highly flexible
- Faster fund transfer
- Ultra transparency in transactions
- Passive income for lenders
- High rate of return on investment
- No permission required
- Open access to anyone
- No one can edit or delete any transaction
DEFI Development Process
- Sharing of preliminary documentation and the project drafts with the clients.
- A Rudimentary platform is created to share all the desired features, functions, and design.
- As the design is confirmed, a full scale development of the platform starts.
- Once the design is complete, a server is installed in the project.
- Customer feedback is integrated at every step of the design of the project
- Assistance is provided in marketing by the Defi lending platform development.
- Updates and upgrades assistance is also provided.
End User Benefits Of Defi Lending Platforms
- Margin trading – A user can purchase a cryptocurrency from a certain exchange and take the same cryptocurrency to another exchange. Margin trading is supported in the centralized system by Defi lending platform. It also supports margin trading for unsupported exchanges.
- Long term investment rewards – DeFi platforms allow a way to lend those assets and earn additional rewards in the form of crypto from interest over the capital appreciation.
- Flash Loans – Many Defi platforms offer its users to borrow assets and execute other functions and it pays after a certain period of time. This is known as Flash loans.
- Non-taxable liquidity – Obtaining crypto loans against a collateral to gain fiat currency, is the best way to avoid taxes over the gain by investors and asset holders of Defi lending platforms.
Choose A DEFI Lending Platform Development Which Can Provide These Features
- Flash Loan
- Rate Switching
- Fiat Payment Gateway
- Crypto Wallet
- Margin Trading
- Investment Rewards
- Arbitrage Fees
- Automated Yield Farming
- Liquidity APIs and more.
Some Of The Famous Defi Lending Platforms Are
- KitteFight and more.
Many options are available in the market and one can choose according to their business requirements.